The effect of finite Larmor radius (FLR) on the stability of m = 1 small-axial-wavelength kinks in a z–pinch with purely poloidal magnetic field is investigated. We use the incompressible FLR MHD model; a collisionless fluid model that consistently includes the relevant FLR terms due to ion gyroviscosity, Hall effect and electron diamagnetism. With FLR terms absent, the Kadomtsev criterion of ideal MHD, 2r dp/dr + m2B2/μ0 ≥ 0 predicts instability for internal modes unless the current density is singular at the centre of the pinch. The same result is obtained in the present model, with FLR terms absent. When the FLR terms are included, a normal-mode analysis of the linearized equations yields the following results. Marginally unstable (ideal) modes are stabilized by gyroviscosity. The Hall term has a damping (but not absolutely stabilizing) effect – in agreement with earlier work. On specifying a constant current and particle density equilibrium, the effect of electron diamagnetism vanishes. For a z–pinch with parameters relevant to the EXTRAP experiment, the m = 1 modes are then fully stabilized over the crosssection for wavelengths λ/a ≤ 1, where a denotes the pinch radius. As a general z–pinch result a critical line-density limit Nmax = 5 × 1018 m–1 is found, above which gyroviscous stabilization near the plasma boundary becomes insufficient. This limit corresponds to about five Larmor radii along the pinch radius. The result holds for wavelengths close to, or smaller than, the pinch radius and for realistic equilibrium profiles. This limit is far below the required limit for a reactor with contained alpha particles, which is in excess of 1020 m–1.